Although millions of people have already heard about cryptocurrency, half of them don’t know how to invest in cryptocurrency. Investing in cryptocurrency isn’t an easy task, but if you become an expert in cryptocurrency investments, then you will be able to generate huge profits in the long run.
Mentioned below are a few points which you must know before investing in cryptocurrency:
- Motive To Invest In Cryptocurrency
You have to find your motive for investing in cryptocurrency.
- Fear Of Missing Out (FOMO)
FOMO is defined as anxiety. A person can suffer from anxiety by seeing posts on social media. He has to control the feeling. He has to make a decision logically.
A person can be jealous of someone who is doing better. Once again he has to control the feeling and make a decision logically.
- Research About Cryptocurrency
A person must research more numbers of cryptocurrencies. Then it will be easy for them to choose a cryptocurrency.
5. Know the difference between Cryptocurrency, Utility Token and Tokenized Security
Cryptocurrency: A digital currency is known as cryptocurrency
Token: It is defined as a new way. The new way is created to represent digital currencies like Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), etc. It is not only created to represent the digital currencies, but it is also created to represent financial instruments like Stocks, Bonds, Venture Capital (VC), Real Estate Investment Trust (REIT), etc.
Utility Token: It is defined as a tokenized form of digital currencies like Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), etc. If an individual wants to develop a new cryptocurrency, then the individual will have to issue a utility token for funding the development of the new cryptocurrency.
Security Token: It is defined as a tokenized form of securities or financial instruments like Stocks, Bonds, Venture Capital (VC), Real Estate Investment Trust (REIT), etc. It is purchased, sold, issued and registered in blockchain technology.
5. Search Exchange
- Search for a reputable exchange
- Create an account on the exchange
- Verify the account
6. Buy Cryptocurrency
Make your first purchase from a reputable exchange
7. Buy Cryptocurrency Wallet
You can buy a cryptocurrency wallet from an exchange. You can also buy a cryptocurrency wallet from other platforms. You have to store your purchased cryptocurrency into a cryptocurrency wallet.
8. 2 Factor Authentication
You have to do 2 Factor Authentication (2FA) for your account and wallet. 2FA is a security process used to authenticate two factors of users.
a. First factor: Something that a user knows (Password)
b. Second factor: Something that a user has or something that a user actually is
The main purpose of 2FA is to stop unauthorized users from accessing other accounts with stolen passwords.
9. Phone Lock
Pins/fingerprint/face recognition can be used to lock your phone
You must keep a spreadsheet of cryptocurrency transactions
11. Buy More Cryptocurrencies
You can buy more than one cryptocurrency.
14. Diversify your crypto portfolio
Cryptocurrency portfolio diversification means when a cryptocurrency portfolio adds more than one cryptocurrency investment to minimize associated risk factors. You invest in four cryptocurrencies such as A, B, C, and D. Cryptocurrencies B and D don’t perform well in the cryptocurrency market, but cryptocurrencies A and D perform well in the cryptocurrency market. You can make profits with cryptocurrencies A and D by selling them.
15. Make Your Strategy
You can either do trading or hodling.
a. Trading: You can buy and sell cryptocurrency hourly or daily with the objective to take advantage of swings in the cryptocurrency market.
b. Hodling: You can hold a particular cryptocurrency for a longer time with the objective to sell the cryptocurrency when it will increase in value.
Note: This article has not been written for the promotion of cryptocurrency investments. But it is written as a knowledge purpose only. Individuals can go ahead with the cryptocurrency investments on their own risk.